Read Bill McCloskey’s Interview with SellUP’s Founder Allan Levy Here.
By Ken Magill with Allan Levy
With the possible exception of relevance, it is arguably the most overused word in email marketing.
Engagement became a hot topic in 2012 when deliverability professionals began touting it as a necessity for continuing to reach subscribers’ inboxes.
Their argument went that the criminal spam issue had largely been solved with filtering technology. As a result, they said, email inbox providers were going to turn their attention to the next problem: commercial senders with large, largely inactive files.
“In the coming year, I think we will see more engagement-based spam filtering, so it’s going to be important for marketers to look beyond opens and clicks to determine who is actively engaged in their email program,” said Tom Sather, senior director of email research for Return Path, in 2012.
But the engagement discussion led some email-deliverability professionals to questionable conclusions, arguably the most damaging of which was counseling marketers to remove email addresses from their files after a certain period of no open or click activity—typically 18 months.
The result was a bunch of marketers needlessly butchering their email files, an often wrongheaded act that continues to this day.
In 2015, the email marketing world was rocked when ISP representatives at an Email Experience Council conference said they did not measure clicks, and that low levels of engagement alone would not get a sender blocked from reaching inboxes.
Did this development render engagement unimportant? No. It still has a relational effect on deliverability. But ISPs aren’t nearly as strict when it comes to engagement as many deliverability experts led their clients to believe. And culling email addresses simply because they have shown no opens or clicks in a certain period is not the way to approach the issue.
Of course, spam complaints and unsubscribes should be removed immediately. Hard bounces should also be removed after efforts to resolve the issue have failed.
But deliverable addresses that have been acquired on a permission basis should almost never be removed from a file solely for lack of opens and clicks.
They simply need to be treated differently than the addresses of folks that have been opening, clicking and buying.
First, the file must be segmented by address activity.
A typical email house file has a small percentage of super-active addresses with high average order sizes and lifetime value. Then there will be a segment that is active, but not as active as the super-active segment.
Send more email to the super-active group, maybe seven emails a week as opposed to five and maybe two emails for the same promotion as opposed to one.
Send the slightly less active group more email but not as much as the super-active buyers.
Then there are the inactives. A typical house file will have a significant segment of addresses the marketer doesn’t even send email to anymore because of their inactivity. There is potential revenue in this group. They simply must be approached with care. But they should be approached with, say, one or two emails a month.
It is important to use the same IP address when sending to inactives as is used to send to the actives and super actives. This way, the weaker email addresses ride on the deliverability benefit of the main IP’s presumably good reputation. However, it is often a good idea to break the inactive segment into multiple mailings to avoid tripping inbox providers’ spam filters.
The key to intelligently increasing engagement is testing.
Test offers. Test creative. Test frequency. Test segmenting parameters. Test the number of links, and calls to action, product mixes—anything that might get more recipients opening and clicking.
During this process, a smart marketer will continuously monitor for when addresses move into different segments, recreate the segments and treat them accordingly.
The marketer who segments, tests, resegments and adjusts email frequency accordingly will naturally increase subscriber engagement and get the side benefit of better deliverability without needlessly butchering their file.
By Ken Magill with Allan Levy
What do peas, Italian wealth in the early 1900s and email house files have in common? The 80/20 rule.
Unfortunately, the 80/20 rule leads a lot of email marketers to punish 80 percent of their file out fear of disrupting the behavior of the 20 percent.
Marketers learn early in their careers—often in business school—about the 80/20 rule and how it applies to business: 80 percent of a company’s revenue is typically driven by 20 percent of its customers.
The 80/20 rule is also called the Pareto Principle, named after Italian economist Vilfredo Pareto.
Supposedly, Pareto noticed in the 1890s that 20 percent of the pea pods in his garden were responsible for 80 percent of the peas. He expanded the principle to economics, showing that 80 percent of the wealth in Italy was owned by 20 percent of the population. He introduced the concept publicly in 1906.
The Pareto Principle has since been applied across countless subjects from quality control to productivity and human-resources management.
The 80/20 rule also applies to the typical email house file. Eighty percent of a company’s email-related revenue typically comes from 20 percent of its subscribers.
Sometimes that 20 number pushes closer to 30 but the concept remains the same.
Interestingly, in an age where marketers are awash in data, most do not make the effort to identify these two groups. In their defense, most are thinly staffed and have their hands full managing campaign minutia.
But identifying, segmenting these two groups and treating them differently can pay big dividends. Many marketers, for example, avoid sending aggressive offers and discounts for fear of training their best customers—the 20 percent—to wait for such offers before they buy.
Their fear is well founded when the two groups are not segmented.
But besides punishing 80 percent of their file for fear of disrupting the activity of the 20 percent, they’re losing out on potential incremental revenue. If they keep sending out the same types of offers that 80 percent of their file have not been clicking on, surprise, surprise, the 80 percent will continue not clicking.
So the way to approach these two groups is to treat them differently. Send the 20 percent more content, such as product recommendations based on their behavior, in-stock reminders and seasonal offers where applicable. Also, dial back the discounts with this group. Since they’re responsible for 80 percent of sales, a 1 percent margin savings translates into 4 percent that can be used to entice the 80 percent to buy.
Then take the 80 percent and start experimenting with offers aimed at getting them to open and click. A free-shipping offer to the 80 percent that isn’t offered to the 20 percent might be enough to show some uptick in key metrics. As always, the key is testing to see what gets some of the 80 percent engaging.
Which brings us to a side benefit. While there is some debate over how much of a role subscriber engagement plays in email inbox providers’ deliverability decisions, no one will argue that engaged subscribers are a bad thing.
The real debate is over how increased subscriber engagement is accomplished. Anyone can increase email engagement immediately by culling dormant addresses from their file. But they will also be culling potential sales.
Marketers who work on getting the 80 percent to open, click and buy get more revenue along with the deliverability benefit of higher subscriber engagement without butchering their file.
By Joseph Orminski with Allan Levy
Consumers like to feel smart. Any sense of achievement when shopping is a feather in their cap. The science of the sale is simple – it hypes consumer emotions. When people have emotional reactions, it’s something they want to talk about it. In retail, when they talk about it, it generates a buzz. It’s a simple process: Show value to your customers. They’ll engage and feel accomplished. They’ll tell their friends how well they did, and those friends desire the same achievement. It’s free marketing when done properly and has benefited retailers for decades. So why did JCPenney, a household name in the retail space, felt it necessary to stray from a path that was working so well? Let’s explore how a strategic pricing misstep made nearly six years ago still haunts the massive department store chain to this day.
Don’t underestimate the power of discounting
In the fall of 2011, Ron Johnson was appointed CEO of JCPenney, with hopes that he could breathe new life into one of America’s oldest retailers. After just seventeen months — and several nearly irrecuperable mistakes — he was out. What happened? Everyday low prices happened. We’ll talk about coupons next. It’s important to break Johnson’s pricing strategy all the way down in order to pinpoint exactly where things took a turn. And it started with the prices.
Johnson had a vision to reinvent JCPenney in the vein of the Apple Store. If anybody was suited for the job, it was Johnson, who had been credited for shaping Target’s image and turning the Apple Store into a success. Johnson thought he had the recipe. The issue was that he neglected the target audience. The new low prices seemed enticing, but he took away the one thing JCPenney shoppers coveted — coupons. People loved their coupons.
As Johnson removed their beloved coupons and sales and increasingly focused on making JCPenney a hip “destination” shopping experience, he quickly learned his innovations were no match for discounting. From boutique stores within the larger store and upscale advertising to updated fixtures and improved merchandise quality, no upgrade stood up to the power of perceived value JCPenney had come to know and love. Many of the chain’s oldest and most loyal customers understandably felt like they were no longer JCPenney’s target market.
Give your customers small victories
Obviously, every consumer desires that diamond in the rough – the sale that’s too good to be true. What’s more common in the shopping experience are small victories. There’s a shift that occurs when a consumer finds a worthwhile sale they can tell their friends about. It’s an experience that fuels that sense of accomplishment we’ve discussed. Look at what I did! Shopping, in physical locations or on online, is a game. And consumers look for the small victories. Whether it’d be “limited time only” sales, special offers, or coupons, consumers are accustomed to playing the game and playing to win. The thrill of the chase was what Johnson underestimated.
Johnson thought it made sense to present realistic prices from the start, as opposed to the cloak and dagger sale routine. While it makes perfectly logical sense to deliver prices at which products are essentially arriving anyway, shoppers aren’t purely logical creatures. They’re lured not by the promise of fair pricing but by thrill of the chase. They want to hunt. And they want tools — coupons, markdowns, special offers. Replacing coupons with everyday low prices removed any sense of urgency or accomplishment for consumers. No more small victories.
Condition your customers
Consumers are very smart. They learn what to expect from you. The only measure of value JCPenney customers had was original price versus discounted price. And they demanded that perceived value. During more than a century of history, JCPenney offered a high-low pricing policy, in effect training consumers to expect sales events and attracting consumers who love sales. By eliminating those sales events, JCPenney took away a reason for consumers to shop the store.
It is possible that over time a new group of consumers would become attracted to JCPenney, who were less promotionally oriented, but this can take a long time. It’s also possible that the chain could recondition consumers to become less promotional, but this process is even more difficult and, in this case, unnecessary.
Everybody is on the discount bandwagon
Traditional department stores like Saks 5th Ave, Macy’s, and Bloomingdale’s are presenting discount divisions for a reason. They realize their customer’s want discounts too. And it’s an adapt or die situation for many of retailers. If you don’t give them the discounts they desire, somebody else will. Off the rack locations like Macy’s Backstage and Off 5th (Saks) are popping up to curb their once loyal customers back in the doors. These major retailers realize the power of discounting and are doing what they can to prevent the bleeding.
Sure, we’re talking about a department store behemoth in JCPenney. But these lessons are universal. Your marketing needs to provide valuable insight into consumer behaviors so you can better understand your audience. That’s the beauty of email marketing — transparency and insight. Understanding how, when, and when people are interacting with your brand is critical information that lends itself directly to conversations about pricing strategy. Why do consumers buy? A variety of reasons. But everybody loves value. Nobody knows your customer better than you, and providing value in a way that caters to your customers’ behaviors goes a long way.
The shopping experience is a game. And playing the game is oftentimes more exhilarating than actually winning. Markdowns, special offers, coupons, and promo codes are tools of the game, rewarding the consumer with a clear path to the value they seek. Be creative in how you present these opportunities in your emails. Real-time countdowns, limited-use promo codes, and clear calls-to-action can position you for conversions in your sales messaging.
Free shipping is another method of discounting that’s very enticing to shoppers. This is important to note as we approach the holiday season. With Black Friday and Cyber Monday on the horizon, the discounting competition is at an all time time. Consumers love free. So as you’re drafting your holiday email content and debating product decisions, consider offering free shipping as additional discounting method to increase sales.
Most importantly, be consistent. JCPenney made serious changes to their strategy, including removing reference prices, eliminating coupons, and even changing their physical locations. And it all came at a cost. Don’t make significant changes unless it’s absolutely necessary. Condition your audience’s expectations. And always think about impact over time.
Discounting is a marathon, not a sprint. Don’t shrink your font sizes in emails or reduce your discount prices prematurely and be surprised when customers lose interest. Be bold and keep moving forward with your pricing strategy. And remember: the Macy’s, Bloomingdale’s, and J. Crews of the retail world are marking their territory in your customers’ inboxes with 40% off discounts everyday.
When it comes to your email marketing strategy, remember the small victories. That’s what consumers are looking for — a sense of accomplishment. It’s not always what you’re saying. It’s how you’re saying you sent. Be conscious and deliberate in your messaging, and don’t overthink your emails. You customers sift through 100s of emails a day. Be bold. Be seen. Be heard. And never forget the ABDs of perceived value: Always Be Discounting.
By Ken Magill with Dela Quist
When it comes to commercial email there are usually two camps in a typical organization: the folks in sales who need to make their numbers and who tend to want to send more email, and the folks in marketing who want to protect the brand and who get squeamish about the possibility of annoying customers with too much messaging.
Somewhat counter-intuitively, any company can ramp up its email volume fairly significantly in a way that allows these two camps to co-exist peacefully. How? Well, just a little more email per subscriber can mount to a significant jump in email volume and related sales organization wide.
What do we mean by a little? One a week. Seriously, just one a week.
The goal is to engineer things so that at the end of the project everyone on the company’s email list is getting one more email a week than they’re getting now.
People who are receiving multiple emails a week get one more. People who are receiving no emails per week get one more than they were receiving previously, as well.
Typically, an organization will have suppressed 30 to 40 percent of its email file due to inactivity. But there’s gold in many of those inactive addresses.
Yes, there’s gold in inactive addresses but there are potential email deliverability pitfalls as well so make sure that you get good advice from your agency or deliverability partner before you reintroduce them (here’s a small tip – don’t ask them if you should do it, ask them what you should do if you had to do it). Oh, and this should not need to be said, but do not EVER send email to people who have previously unsubscribed.
Be aware, though, that when increasing email frequency, even by one a week, open rates per send will drop, because inactives open at a lower level – but their click-to-open rate is higher. This is nothing to get worked up about, because engagement the total number of openers and clickers you get every month with rise. A lot.
The way to look at opens is not per send, but over the course of a year. Forty to sixty percent of a file failing to open email within a 12-month period is normal (we recommend a target of 50%). Whatever the percentage of inactives on your list is, if that number begins creeping up, it’s time to start working on the inactives.
Notice we didn’t say stop mailing them. We said start working on them, a strategy for which is outlined here.
Adding one email a week to the entire file and working on re-engaging inactives are two projects that will naturally be coordinated.
With a well-thought-out strategy for reactivating lapsed subscribers in place, adding one email a week should not result in any deliverability blips. Meanwhile, active subscribers will get just one more message per week—no big deal. And people who are currently getting no email will get just one email per week—no big deal.
But the effect on sales across all channels is likely to be a very big deal.
In our next post, we’ll cover what those emails should convey.
By Ken Magill with Dela Quist
So once the email team shows management that email is driving vastly more sales than for which it gets credit, what should they do with that information?
In parts one and two of this series, we covered how last-click attribution fails to give email proper credit for the sales it drives, why it’s important to make the effort to give it proper credit and a simple way to do it.
So what’s next?
Well, for one thing the email team starts by lobbying to send more email. And they should lobby for more resources to do it.
It’s a fairly straightforward proposition and shouldn’t be controversial in a rational environment. A simple review of daily sales figures has just shown that on days during which the company sends a lot of email, there is a significant boost in sales across all channels that can’t be accounted for any other way than email’s so-called halo effect.
Since everyone in the organization presumably leaves their warm bed in the morning to make as much money as possible, the next move is simple, at least in concept: Make every day a high-volume email day. Once it has been demonstrated that high-volume email days drive significantly more sales across all channels, there is no rational argument for low-volume email days.
Some people may unsubscribe because of the increased email volume, but the resulting increased sales will more than make up for them. And in the highly unlikely case they don’t, email can always be dialed back. Sales missed from hesitating to implement more high-volume email days cannot be made up. Once they’re missed, they’re missed.
And while implementing more high-volume email days is a simple concept to justify, it’s not as simple to pull off as just sending out more of the same messaging. The trick is implementing more high-volume email days in a well-thought-out manner using the proper resources.
Think of it this way: When an organization rolls out a massive national television advertising campaign, it doesn’t just deliver the same message repeatedly. Think: Geico, or even that weird Lincoln automobile campaign last year with Matthew McConaughey.
The TV spots in those two examples are a series of different messages designed to support one another as part of the larger campaigns’ overall messaging. Although it’s not clear what Lincoln’s message was with the McConaughey campaign.
Significantly ramping up email is no different. A smart marketer would never consider alienating their audience by tripling or quadrupling their organization’s email volume without upgrading and increasing email resources.
A significant email ramp up most likely will require investing in better analytics tools, maybe even investing in a new CRM system and possibly switching to a more advanced email service provider.
The email team will probably need to be expanded to meet the increased creative-and-production requirements.
The email team will also need to be involved in strategy-and-tactics discussions on an ongoing basis and at a high level rather than directed to send campaigns on short notice as an afterthought.
Email should be viewed as a pillar of any ongoing sales-and-marketing drive aimed at customers and treated as such.
Most importantly, there must be C-level buy in. But once the email team irrefutably demonstrates their channel’s halo effect, if there is no C-level buy in to a significant email ramp up, then it’s probably time for email team members to look elsewhere for employment.
In the eyes of many, ‘luxury’ and ‘exclusivity’ are synonymous when it comes to branding. A large number of the luxury brands maintain their status purely because of their exclusivity, ensuring their products are coveted by many and owned by a few through prohibitive pricing and limited edition rollouts. Generally speaking, people want what others can’t and don’t have. As important as status may be to the brands themselves, it’s equally important to luxury consumers. However, with disposable income, accessibility, and brand awareness on the rise, it’s becoming increasingly difficult for brands to maintain exclusivity. The constant push and pull of popularity versus exclusivity has many brands rethinking their marketing strategies.
Building an effective marketing strategy for a luxury retail brand is not always easy. While social media encourages accessibility, luxury brands tend to thrive on maintaining their exclusive status – constantly reaffirming their position as an elite, aspirational force to be reckoned with. However, nothing conjures up a fantasy like quality and immersive content. Let’s examine how luxury brands can use email marketing to effectively lead with exclusivity and keep high-end consumers coming back for more. And we’ll discuss how to scale the exclusivity model to fit any business, using limited edition runs as a balance to discounting.
Pull customers into an exclusive circle
Mass brands define who their customers are and push products towards them. For luxury brands, the roles are reversed. Consumers must be pulled towards the brand with the promise of belonging to an exclusive community. Many consumers may want access to this circle, but only a select few who truly share the brand beliefs can really belong.
To this end, luxury brands should create artificial barriers or initiation rituals to select which customers gain admittance. If a customer wants to buy a premium Apple product, all they have to do is pay the price. But many luxury brands steer customers to form a long-term and intimate bond with the brand if they want to be offered the opportunity to buy one of the manufacturer’s “limited edition” products. Rather than putting customers off, this behavior creates a sense of inclusion in an elite club. Customers stay loyal and are rewarded for it.
Posing calls to action as an invitation into the circle is a powerful email marketing tool. By making customers jump through some initiation hoops, brands are able to establish a segmented audience that’s self-selecting. Essentially, if your customers want access to exclusive products before the general public, they’ll do whatever is necessary to gain that access.
Give your customers a voice
Consumers love to show off their high-end products – the elite status they’ve achieved gives them an overwhelming sense of pride. Many luxury brands have successfully given their customers a forum to do so. And in return, these customers increase brand awareness. Social media is a powerful tool for this type of engagement.
In 2013, Jaguar launched #MyTurnToJag, which called upon consumers to state why they should win an opportunity to test drive the brand new F-TYPE convertible. The campaign lived primarily within a Facebook page comprised of posts, tweets, and Instagram photos, proving that Jaguar has an avid fan base willing to endorse the brand publicly.
At the end of 2014, the brand launched Why Jaguar, a section of its site detailing its car models and customer photos and reviews. The luxury car dealer asked users to submit photos and reviews, which were then displayed on its website.
While not a direct sales tactic, a call for customer participation, such as this, keeps your audience involved and puts the consumer in the spotlight. Accessibility through social media can fuel the fire for inclusion. Jaguar was able to humanize their brand and increase awareness with an opportunity for a test drive. That’s powerful marketing.
The luxury retail space relies heavily on the customer’s perception of exclusivity. Newsletters are a great way to heighten this perception. Luxury brands should offer exclusive promotions and sneak-peeks to high-end consumers. Strategic email marketing can provide valuable insight into a brand’s newest products and upcoming promotions, and build upon the perception of exclusivity. Consumers should feel like they are one of the select few to know about a brand’s new endeavors before they’re rolled out to the general public.
In keeping with exclusive content, “behind-the-scenes” content is another powerful tool brands can include in their email marketing strategy. On The Window, the branded content hub for Barneys New York, readers are given a behind-the-scenes look at their favorite designers. They are taken into designers’ worlds, and learn about the inspiration behind the clothes and jewelry they wear.
In an article and video on the site about ring designer Yves Spinelli, the audience is shown how Spinelli comes up with his designs and what they symbolize. Instead of seeing just a ring, they can discover the effort and thought behind it and appreciate it more. At the end of the post, the audience can also “shop the story” and buy a Spinelli ring. This is a prime example of a creative call to action. Present exclusive content. Tell a story. Include the consumer in the story.
Exclusivity to scale
You don’t have to be a big luxury brand to employ the exclusivity model. In the previous installment in this series, we discussed ways in which effective discounting can impact sales. As a balance, creating exclusivity can do the same. No matter the size or nature of your business, implementing limited edition runs of a product can invoke the incessant need consumers have to get it before it’s gone. Offering limited colors and quantities, and even a limited edition of a particular style of product, will create a sense of urgency in your audience.
Another tactic to think about is actually numbering the products to embody the true nature of a limited edition. If you’re releasing 100 shirts, including ‘1 of 100’ on the labeling or in an email confirmation can make your customer feel like part of something special.
Digital marketing is your ‘secret’ weapon
Let’s take a look inside a digital marketer’s toolbox. First, we find email marketing. Email campaigns should be considered in the context of long-term relationships. There must be a reciprocal feeling of value. Each email is another page in the storybook, and the idea is to keep your customers reading. In the luxury space, the minute consumers feel the exclusivity of your brand fading, or that there are too many people joining the club, they begin drifting.
By creating artificial barriers and initiation rituals, consumers form self-selecting inner circles that become your elite segment. Providing exclusive content to this audience keeps them interested and makes them feel like they’re in the know. Luxury email marketing can be most effective when it reads as if you’re sharing a secret with the consumer. They want to hear it first.
Regardless of the brand, exclusivity requires precision. Mastering email marketing, pay-per-click, and social media advertising will keep your approach surgical. Creativity, research, and a sound digital marketing strategy can make anything feel exclusive – even a brick. Just ask Supreme.
By Ken Magill
So, last-click attribution fails to give email it’s proper credit for the sales it drives. So what? Why should anyone care? The sales are still happening.
Well, if email is driving more sales than it’s getting credit for, then folks across all of marketing and sales should be interested in rectifying the issue.
Why? Because proper attribution clarifies how the various sales and marketing channels support one another.
For example, suppose for an offline/online retailer, email drives more bricks-and-mortar purchases than it is given credit for. Hint: It pretty much always does. Once store and district managers learn how email is helping them meet their numbers, they will enthusiastically support the company’s email program by, among other things, working harder to feed quality addresses into the system.
They also won’t grouse when the email program gets periodic upgrades because they know it will benefit them.
Also, once given closer-to-proper credit, the email team or person will be pulled into the strategy process much sooner than is currently the case at most organizations.
Too often the email team is notified of a new marketing push days before it happens and has little time to put together proper creative and strategy.
If C-level executives are made aware of the email program’s true ability to drive sales, they will take it more seriously, sink more resources into it and the result will be that email helps the other channels even more than it does in its current mostly afterthought state.
One way to demonstrate how email marketing drives sales for which it doesn’t get credit is to suppress a segment of the file and compare sales across all channels between the sent file and the suppressed file. Good luck getting management to go along with that scheme, though.
Another more palatable way to better assess email’s overall effect on sales is to simply compare sales across all channels on low-volume email days to sales across channels on high-volume days.
Very few organizations have days in which they send no email. They have high-volume days when their main campaigns go out. And they have non-campaign days when confirmation emails and triggered messages such as abandoned-cart and welcome emails still go out, but most of the file doesn’t get email. So there is always some email going out, just not as much on some days as others.
Simply get the sales figures across the organization on high-volume email days and compare them to overall sales on low-volume email days. The results will most certainly show that sales across all channels are significantly higher on high-volume email days than low-volume email days. It’s a dead-simple process that can be done with financial reports that already exist.
The trick is deciding what constitutes a low-volume email day versus a high-volume one. The difference should be significant enough that the results will be obvious, say, 20 percent versus 80 percent.
Dela Quist, CEO of email agency Alchemy Worx, uses this technique when first engaging with new clients or assisting existing clients with budget setting and has seen some eye-popping results.
“In a very recent case we looked at average day sales across non email channels when the client mailed to pretty much their whole list to average day sales on days when they sent to less than 20 percent of their list and there was a huge difference between those two numbers,” he said.
“The difference in non-email revenue between a day when everyone gets email and a day when almost nobody gets email is more than they used to attribute to email altogether,” he added.
How much more?
That’s nearly $200,000 a day more than the total daily sales for which email was getting credit. String a few of those days together and pretty soon we’re talking real money.
The next question is what to do with the information gleaned from this simple test.
We’ll tackle that in part three.